Gold Prices Tumble Amid Inflation Fears and Rate Hike Expectations
Gold prices dipped on Wednesday due to concerns that escalating Middle East tensions could drive inflation higher. The increased risk of inflation led traders to bet on elevated interest rates, with key US inflation data set to be released later this week.
The market is awaiting the US producer price index data on Thursday and consumer price index data on Friday. Brent crude prices jumped for a fourth straight session, putting upward pressure on inflation as higher energy costs filter through the broader economy.
Elevated interest rates weigh on the appeal of non-interest-bearing bullion, despite gold being widely regarded as an inflation hedge. The Bank of England is expected to keep Bank Rate at 3.75 per cent for the rest of the year and through at least mid-2027, according to a Reuters poll of economists.
The spot price of gold was down 0.1 per cent at $4,349.44 per ounce, while US gold futures for December delivery were down 1 per cent at $4,393.30.